New-Look Branch Designs Expand Across Nation

Atlantans may not realize it, but over the past year they have become test subjects in a grand experiment in branch banking.Most of the area’s banks, like those around the nation, have traditional branches, but newcomers to the market and others are turning tradition on its head.Gone are long lines and the institutional air of branch employees. In their place are bright color schemes, “teller towers,” Internet kiosks, and concierges who greet customers.The major players in this experiment are Bank of America Corp. of Charlotte, N.C., and Seattle’s Washington Mutual Inc., both of which have opened retail-style branches in Atlanta during the past year. Meanwhile, National Commerce Financial Corp. of Memphis is forgoing stand-alone branches and relying entirely on supermarket outlets for its Atlanta entry this spring.A growing number of U.S. financial services companies have begun to talk less about “branch platforms” and more about merchandising and service as they develop alternatives, or at least improvements, to traditional branch designs. Banks are demanding more from their branches, using them to sell a wider variety of products, improve customer satisfaction, and build brand.“Whereas before banks saw themselves in a certain genre of interior, I think they’ve realized they’re selling a product and service just like retail stores today. There’s a lot to be learned from the way retail stores talk to their customers and sell their products,” said Michael Bodziner, a partner with Gensler, a New York design firm that has worked with Bank of America in Atlanta and for ING Direct and other financial companies in the United States and abroad. Banks and retailers are keen on Atlanta because of its rapid growth and its demographics, but it is by no means the only city where innovations are cropping up.Wamu conducted a trial of its Occasio store design in Las Vegas two years ago before expanding the concept to Phoenix and elsewhere in its network, ING Direct and E-Trade opened Internet cafes in New York to help promote their online services, and San Francisco-based Wells Fargo & Co. has brought Starbucks coffee and similar features to some branches.In rethinking the traditional branch model, banks are reversing course from the 1990s, when many were nudging customers toward ATMs and promoting the Internet. As they did this, many also touted the big cost-savings of these “touch-less” channels.But maybe they didn’t appreciate how much people appreciated the old channels. In a TowerGroup survey last year, nine out of 10 consumers said they had visited a branch within the past month. Amy Brady, who oversees Bank of America’s Atlanta prototype market project, said many customers may like having new technologies available but still want “high-touch,” says.Jerry Silva, a senior analyst for retail banking at Needham, Mass.-based TowerGroup, said branches “have languished for a period of 20 years with no strategic investments. Teller stations are practically the same as they were 20 years ago,” and PCs in branches “are just as old. The banks have to start renewing this technology infrastructure with a brand-new approach.”But technology isn’t the whole story. As banks tighten their focus on service and try to build national brands, they are realizing that their branches are a key to name recognition. To Kerry Killinger, Washington Mutual’s chairman and chief executive, a company’s retail presence is an important part of branding. At Wamu, it is one component of a drive to build market share in what the CEO calls America’s “middle market.”“A brand is a lot more than just a product or service,” Mr. Killinger said in an investor presentation last fall. “It’s the essence of what a company is, what it stands for, and what’s trying to accomplish. It’s more than ads; it includes the infrastructure as well as what your people are doing.”Wamu and Bank of America also say they are rethinking hiring and training for their branch employees. Karen Curtin, a Wamu senior vice president for planning and franchise development, said: “We changed our focus to look for more sales and retail experience, more customer interaction experience. We also re-engineered a number of operations.”BANK OF AMERICAIn Bank of America’s case, the changes are part of a 28-branch “prototype market” project begun in late 2000 in Atlanta to test branch concepts. There is no single office type, to be cut and pasted into every location. Instead, B of A’s trial includes three designs spread among the 28 offices: Four named “Bank of America Express” are what retail experts call “transaction centers,” offering quick and basic services aimed at customers on the go. Five larger “financial centers” are loaded with Internet-linked computers, wide-screen TVs, and other high-tech touches. They also sell a range of products from loans to mutual funds to insurance. Another 19 “enhanced traditional” branches have been equipped with innovations developed at the other centers. Ideas that work in Atlanta — whether they are designs, training programs or sales processes — are being exported to the rest of B of A’s 4,300 branches nationwide. They include a “Spirit to Serve” campaign designed with help from the Disney Institute in Florida; host stations where associates greet customers; an online system that lets branch employees sell a wider range of loans; and an online system for retrieving images of canceled checks. “Spirit to Serve” training is part of a program to transform B of A’s culture, Ms. Brady said. Chairman and chief executive Kenneth Lewis has said he wants his to be one of the world’s most admired companies, and, Ms. Brady said, “You can’t do it without changing the hearts and minds of your associates.” She said that eventually all employees will go through at least one service training session under “Spirit to Serve.”So far, concepts tested in the prototype market are being considered one by one for adoption across B of A’s branch network. Ms. Brady said the company hopes to export two dozen or more ideas from the test in the years ahead.In time, she said, versions of the “express” stores or financial centers could be used as the company builds new branches. “We already are influencing the design of the de novos [branches] that we have throughout the franchise, including locations in California.”The company wouldn’t say just how it measures the success or failure of these ideas, but Ms. Brady said customer satisfaction scores in Atlanta have risen considerably since the branch project began in late 2000. On some points, the improvement is dramatic: After B of A installed televisions showing CNN above teller lines in its “express” branches, the perceived waiting time fell 51%, according to customer surveys.WASHINGTON MUTUALWashington Mutual chose Atlanta as the third expansion market, after Las Vegas and Phoenix, for its trendy Occasio stores. In December the thrift giant opened the first 20 of a planned 60 to 80 Atlanta locations.The Occasio offices eliminate teller counters; employees work a retail floor to help customers — and sell products. Most of the stores include a children’s play area and a small shop selling personal-finance books, software, toys, and Wamu-logo merchandise. The current hot seller: a line of piggy banks priced at $5 to $25.The brightly colored interiors are meant to coax customers in from the street. “One of the key points was taking our brand and bringing that to life in the physical space,” Ms. Curtin said. Wamu worked with Design Forum, of Dayton, Ohio, on the Occasio project.When the concept was in its early stages, “many competitors were sending people to the ATM or charging people [fees] to meet with a teller,” Ms. Curtin said. “We’ve worked very hard to create an environment that invites the customer into our branch.”Wamu tends to choose neighborhood shopping centers anchored by a large grocery and likes to put the stores in a “bookend” location in the centers. It has begun retrofitting branches in other cities to the Occasio design and now has about 180 Occasio stores nationwide. On March 14 it announced plans to open as many as 40 Occasios in the New York area over the next year, including 11 in Manhattan, in a major New York/New Jersey expansion that included the Jan. 7 acquisition of Dime Bancorp.Shortly after the Occasio openings in Las Vegas, Wamu reported that the branches were signing up new checking accounts at double the rate of new traditional branches. Deposits were running about triple the typical rate for new branches and loan production also was higher. “The profitability of branches under this model is coming faster than our traditional banking model,” Ms. Curtin said